Tax reform is not dead, but it certainly sounds postponed.
Rep. Sander Levin, D-Mich., ranking member on the House Ways and Means Committee, said Tuesday that momentum behind what had been a widespread push for tax reform in 2013 eased after the fiscal-cliff deal that met some Democrats’ main aim of raising tax rates on the wealthy.
What’s more, other fiscal fights will take precedence this year—primarily the coming debate over the across-the-board sequestration spending cuts.
“I’m not very confident. I’m hopeful,” Levin said of the outlook on tax reform this year.
“We took some steps in the last package that has some ramifications for tax reform, but I’m not saying that we should not sit down and talk about how we look at our tax structure and how we reform it,” he said at a Christian Science Monitor breakfast. “It’s affected by what we voted on, but it isn’t anything close to the whole package. I think what it does is it forces people to be more concrete about what they mean about tax reform.”
While a comprehensive rewrite of the tax code appears delayed until 2014 at least, tax policy will stay front and center.
Levin called for a “balanced” approach to replacing the sequester that would both raise revenue and cut spending. Some Republicans have said the higher rates agreed on under the fiscal-cliff deal now take taxes off the table in future negotiations, but Democrats reject the suggestion outright.
“Let me be emphatic. There is no way to meet the requirements of sequestration without balance. There has to be more revenues and there also has to be budget cuts,” Levin said.
“We need to essentially deal with sequester. Essentially find a balanced approach that is going to raise $1 trillion or close to it.”
Levin said he is open to considering concepts behind an administration idea to cap the deduction amount for those earning $250,000 and above at 28 percent. But he said he’s not in favor of accepting the proposal “lock, stock, and barrel.”
Levin urged sequester negotiators to look at expanding the personal-exemption and itemized-deduction phaseouts known as PEP and Pease.